Al Jaber Group of Abu Dhabi Talks With Lenders About Altering Debt Terms

By Camilla Hall and Zainab Fattah -
Dec 19, 2010

Al Jaber Group, an Abu Dhabi-based
holding company with interests in construction, is talking to
lenders to alter terms on its debt.

The company, which has 16 billion dirhams ($4.4 billion) in
projects, “found it difficult to raise the appropriate finance
to secure additional work and maintain its expansion in the
region” because of the credit crisis, Al Jaber said today in an
e-mailed statement.

Property prices dropped by more than half in Dubai and by
30 percent in larger neighbor Abu Dhabi as banks tightened
mortgage lending and speculators fled the market during the
global financial crisis. State-owned developer Nakheel PJSC,
which spearheaded Dubai’s building boom, is seeking to change
terms on more than $10 billion of debt and contractor claims.

“Borrowing isn’t easy for contractors at this time and
they need the money to finish projects,” Mala Pancholia, an
analyst at NBK Capital in Dubai, said by telephone today. “The
receivables issue will continue to be an overhang for them in
the coming year.”

Al Jaber, which has assets of more than $5 billion, said it
expects to reach an agreement with its lenders next year. The
group, whose unit Al Jaber LEGT Engineering & Contracting (ALEC)
LLC worked on Dubai’s Mina A’Salam hotel and the Kempinski hotel
at Dubai’s Mall of the Emirates, owes at least $1.1 billion in
loans maturing over the next four years, according to data
compiled by Bloomberg.

Earnings Woes

Construction companies have been struggling as developers
delayed payments when the financial crisis prompted banks to
restrict lending for real-estate projects and some buyers
defaulted on purchases of properties sold before building began.